Tough Luck, New Delhi

India’s politicians have recently tried to lift a cloud of negativity around the country’s economic prospects. Some outsiders aren’t yet impressed.

Standard & Poor’s on Wednesday warned it could downgrade India’s sovereign rating to junk. The view is more disheartening for the politicians because it comes after a slew of reform measures by New Delhi meant to kick-start the economy. Over the last month, the government has moved to allow more foreign direct investment in critical industries like retail, insurance and aviation. It has also increased pump prices of diesel by reducing costly subsidies.

S&P’s gloomy report on India’s short-term prospects isn’t the only sour note. The International Monetary Fund Tuesday said India’s economy will grow by 4.9% this fiscal year ending March — a 1.3-percentage-point cut from its prediction just three months ago.

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